New Delhi (FNO)- In a move aimed at supporting economic momentum, the Reserve Bank of India (RBI) on Thursday reduced the repo rate by 25 basis points, bringing it down from 5.50% to 5.25%. This latest cut takes the total rate reduction in 2025 to 125 basis points, marking one of the most aggressive easing cycles in recent years.

The central bank’s decision has sparked fresh optimism among homebuyers, who are now expecting a decline in EMIs as banks begin adjusting their lending rates. Housing finance companies are also likely to revise their interest slabs in the coming weeks, potentially offering relief to borrowers hit by previous cycles of rate hikes.

The decision followed the deliberations of the Monetary Policy Committee (MPC), which met on December 3, 4, and 5 to review domestic and global economic conditions, inflation trends, and financial stability indicators before voting on the policy action.

According to analysts, a softer interest-rate environment could boost credit demand, revive sentiment in the real-estate sector, and provide a cushion against external economic uncertainties.

Market participants will now closely track how quickly commercial banks transmit the rate cut to consumers and whether this signals the beginning of a more prolonged easing phase.